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Thursday, December 6, 2012

Lars Syll — What is money?

On Hyman Minsky.

As all students of economics know, time is limited. Given that, there has to be better ways to optimize its utilization than spending hours and hours working through or constructing irrelevant economic models. Instead of risking to just reinvent the wheel, I would rather recommend my students allocating their time also studying great forerunners like Keynes and Minsky, to help them constructing better, real and relevant economic models – models that really help us to explain and understand reality.

Read in conjunction with Philip Pilkington's post on mainstream economics as metaphysics. Could have added Austrian economics, too. Assumptions that are not empirical and are not tested, or even cannot be tested empirically are metaphysical. They function as norms in the logical construction of a worldview. Let's get real.

It is reductionist, Matt. It reduces assertions to facts. That's just what science does. Science is only reductionist in a pejorative sense in claiming that facts exceed their limits. E. g. humans and animals are not "nothing but" stimulus-response mechanisms as behaviorism holds.

I am a philosopher, so I like metaphysical explanations. But I am also aware that they are arbitrary when they assert absolutes and transcendentals as self-evident. They are just tools in model-making, and a lot of different models can be constructed that have an effect on how people see the world and behave in it because the putative absolutes and transcendentals function as norms.

All of us do this consciously or unconsciously, most unconsciously and often inconsistently. An overarching framework is needed to give structure to an otherwise buzzing, blooming confusion of experience, to paraphrase Wm. James.

The problem is that there are a lot of different ways of doing this structuring and none is able to show it is absolute, although most people presume that their picture of the world is as things actually stand and people who do not agree are morons, crazy, or disingenuous.

Where we all can agree mostly is over "facts." But not always, since the way one looks at the world shapes the facts. Facts don't exist per se. They correspond to logical constructs called propositions. It is we that project "facts" on an otherwise undifferentiated "world" of experience, and different cultures and sub-cultures do this differently.